GBP/USD, EUR/GBP flows: Labor mkt data remains soft; BoE to adjust long-end QT

UK labour market data maintains its softer tone with payrolls declining by -26k following the 13k drop in July, and the claimant count rising 27.8k, albeit with ILO unemployment remaining at 4.9% (mkt 5%) in Jul. Earnings also nudged down in line with expectations at 3.9% 3m y/y from 4.1% and 3.5% ex bonus, with the underlying trend gradually easing to a pace broadly consistent with the inflation target. Job vacancies ticked down and remain at the lowest since spring 2021. Data continues to make part of the case for the BoE to continue to adopt a watching brief leaving rates on hold at this month’s meeting, in contrast to the ECB and expectations for the Fed. 

Also on note this morning is the report in the Telegraph that the BoE will rejig its bond sales at this week’s annual vote on quantitative tightening. The paper suggests that it will stop selling 20yr and 30yr bonds, a move that might seem reactive to the recent bond market action but which makes complete sense in terms of both avoiding adding unnecessary unintended tightening and also from the perspective of cost management and long-term liquidity 

Little independent action in sterling this morning, cable still slightly heavy along with most pairs, 1.3450 congestion then the 1.3405, 50% Fibonacci level next levels down.